The ongoing drama surrounding the popular video-sharing app TikTok has inadvertently boosted the fortunes of several Chinese consumer companies, as American users flock to alternative Chinese-made social apps. The sudden influx of new users has sparked optimism among investors, who believe these companies could benefit from the increased exposure to a potentially lucrative customer base.
One of the primary beneficiaries of this trend has been Xiaohongshu, a Chinese social media platform now known in the United States as RedNote. In just two days following the U.S. Supreme Court’s indication that it might uphold a law banning TikTok, RedNote saw a staggering 2 million new users join its platform. This surge in popularity has had a ripple effect on the stock prices of companies such as Hangzhou Onechance Tech Corp. and Yantai China Pet Foods Co., which have experienced significant gains since the news broke.
Investor sentiment has been buoyed by the prospect of these new American users discovering and purchasing Chinese-made goods through the RedNote platform. Chen Shi, a fund manager at Shanghai Jade Stone Investment Management Co., commented on the phenomenon, stating, “The cross-border discussions show that Chinese goods do have appeal and are competitive in the eyes of the U.S. consumer.”
RedNote’s meteoric rise saw it become the most-downloaded free app on Apple Inc.’s iPhone download charts and secure a spot in the top 10 on Alphabet Inc.’s Google Play store. The app, often described as a Chinese version of Instagram, has captured the attention of American users seeking an alternative to TikTok, which briefly shut down in the U.S. on Sunday before President Trump delayed the enforcement of a national-security law and granted the app’s owners more time to find a buyer.
The speculation surrounding the potential benefits for Chinese companies with a strong presence on RedNote has led to some impressive stock market gains. Hangzhou Onechance Tech, a digital marketing firm, saw its shares soar more than 70% in the three days following the Supreme Court’s indication, as investors anticipated an increase in Chinese companies’ social media exposure on RedNote and a potential rise in content tailored for English-speaking users.
Similarly, Yantai China Pet Foods experienced a surge of up to 25% over three days, starting from Jan. 14. This spike was attributed to a unique trend on RedNote, where new American users were asked by their Chinese counterparts to share a photo of their pet as a “cat tax.” Analysts suggest that manufacturers of home appliances, apparel, and snacks with a strong presence on the app may also stand to benefit from the influx of American users.
Zhao Zhongping, an analyst at Sinolink Securities, highlighted the potential impact of this development in a research note, stating, “American users have great consumption potential, and if they stay on the platform, will boost Xiaohongshu’s ecosystem and benefit the multi-channel-network, cross border e-commerce, marketing companies and brands with overseas business.
As the uncertainty surrounding TikTok’s future in the United States persists, the migration of American users to Chinese-made social apps like RedNote presents a unique opportunity for Chinese consumer companies to expand their reach and tap into a new, potentially lucrative market. The long-term impact of this trend remains to be seen, but the initial surge in stock prices and the enthusiasm surrounding the potential for cross-border e-commerce suggest that investors are optimistic about the future prospects of these companies.
While the TikTok drama continues to unfold, with President Trump ordering the Attorney General not to take action against the app for 75 days, the rise of RedNote and the subsequent boost to Chinese consumer stocks serve as a reminder of the interconnected nature of the global digital landscape. As users increasingly seek out new platforms to engage with content and connect with others, the companies that can adapt and capitalize on these shifts in user behavior stand to reap significant rewards.
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